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09

October, 2019

Sell ITM Put Spread — Bullish Strategy For Earnings Trading

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Summary:

Sell ITM Put Spread

This strategy is more aggressive than the Bullish Coin Flip, but less aggressive than OTM Call Options.  

Requires the stock to move in your direction, and the reward is typically 2-4x what you risk.

Buy a put option with a strike price higher than the current price of the stock.  Sell a put option with a strike price even higher than put you bought. 

Example:  XYZ at $60.  Buy the $65 put, Sell the $70 put for a net price of $4.00 credit.  

You’ll profit $4.00 if XYZ is above $70 at expiration, but could lose $1.00 if XYZ is below $65 at expiration.

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